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Buck-It List

Orange County hospitality companies and properties, pressured by high third-party costs, including from online travel sites, deviated this year from a 30% hotel industry cut in commissions paid to meeting planners by increasing what they pay.

Global hotel chains reduced the bounty for group bookings at their properties from 10% to 7%. In response, Orange County hotel and resort properties bumped theirs up to anywhere from 11% to 13% for varying time frames.

In January, Marriott International Inc. in Bethesda, Md., was the first to announce a reduction for properties in the U.S. and Canada, effective March 31. Hilton Hotels & Resorts in McLean, Va., followed suit in March for bookings after Oct. 1. InterContinental Hotels Group PLC in Denham, U.K., joined the club in May, for groups business starting on Jan. 1.

OC bucked the trend.

In a “We Appreciate You” promotion, Preferred Hotels & Resorts in Newport Beach paid 11% commission for 60 days—April 1 to July 30 for “any programs that exceed $100,000 in rooms revenue.”

Preferred is a global marketing and membership group for boutique and premium hotels. Local members include Montage Laguna Beach and Surf & Sand Resort in Laguna, and Balboa Bay Resort in Newport Beach.

Newport Beach-based Irvine Co. hotels Resort at Pelican Hill and Fashion Island Hotel in Newport Beach, and Hotel Irvine—went even further.

The land owner and developer’s Southern California Coastal Collection bumped commissions for “third-party group planners and intermediaries” to 13% on all new group bookings made by year-end. It markets the collection in a terraced approach starting with “lifestyle” property Hotel Irvine, then luxe Fashion Island Hotel, followed by Forbes five-star property Pelican Hill. The three combine for about 1,150 rooms, suites and villas, and Irvine Co. anticipated positive results across the price spectrum.

“Across the Coastal Collection, 16% of our business is eligible for commission,” a spokesperson said by email.

“We value our third-party partners … our priority is to build solid, fair and, most importantly, quality relationships for the long-term,” said Irvine Co. Resort Properties Senior Vice President of Sales and Marketing Michael Lorenz also via email. “This year’s commission increase re-affirms our commitment.”

Industry publications said the move by three of the biggest hotel operators suggests a new relationship between what are essentially producers—the hotels—and distributors—meeting planners. One noted “a growing sense the old business model of working for clients but getting paid by suppliers … is on the way out.”

Orange County, for instance, has more than 100 hotels under the Marriott, Hilton and IHG flags.

Independent, boutique and luxury operators, though, saw another chance to stand out.

— Paul Hughes

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